Quorum Information Technologies Inc. (“Quorum” or the “Company”), a
leading provider of dealership and customer management software and
value-added services to the automotive industry, released its
results for Q2 2020 today.
“I’m very proud of our people who rose to the
challenge created by COVID-19 in Q2 and delivered a strong
quarter.” stated Maury Marks, President and CEO. “During the
quarter we effectively preserved our SaaS and BDC annual run rates,
increased our cash position and re-prioritized our key development
projects to provide our dealership customers with software tools to
assist them during these challenging times.”
“With our dealership customers facing an
extremely difficult business environment in the quarter, we
proactively addressed these concerns by providing a monthly
discount for April and May. Strategically, this short-term discount
protected long-term SaaS and BDC revenue. This strategy was
effective and our normalized Q2 2020 revenue run rates, before $1.8
million in discounts, for SaaS and BDC revenue were $5.8 and $1.8
million respectively. Our SaaS and BDC quarterly run rates based on
June 2020 revenue were $5.8 and $2.0 million respectively, which
translates to annual run rates of $23.4 and $8.0 million.”
Revenue Type(all numbers in million $) |
ReportedQ2 2019 |
ReportedQ2 2020 |
Q2Discounts |
Normalized Q2 2020 Revenue |
Q2 Run Ratebased onJune 2020 |
Annual RunRate basedon June 2020 |
SaaS Revenue |
$ |
5.5 |
$ |
4.3 |
$ |
1.5 |
$ |
5.8 |
$ |
5.8 |
$ |
23.4 |
BDC Revenue |
$ |
1.9 |
$ |
1.5 |
$ |
0.3 |
$ |
1.8 |
$ |
2.0 |
$ |
8.0 |
“During the quarter we tightly managed our cost
structure and balance sheet. We also realized additional cost
synergies from our One Quorum strategy which leveraged the
economies of scale from our three acquisitions. Finally, during the
quarter Quorum received $1.8 million from the Canadian federal
government’s CEWS program, which offset our April and May revenue
decline. The result is that Quorum produced an adjusted EBITDA of
$1.1 million in Q2 2020 or 14% of normalized revenue.”
“We have noted recently a trend toward
re-opening the economy in both Canada and the US which should allow
for increased activity for our dealerships and Quorum. While the
COVID-19 pandemic will impact our 2020 results, we are extremely
well capitalized and have a strong plan to emerge healthier than
ever as we move through 2020, just as we did in the last recession
in 2009.”
Second Quarter Results
- SaaS revenue was $4.3 million, a decrease of 23% compared to Q2
2019.
- June SaaS revenue was $1.94 million, or a quarterly run rate of
$5.8 million.
- BDC revenue was $1.5 million, a decrease of 18%.
- June BDC revenue was $0.66 million, or a quarterly run rate of
$2.0 million.
- Total revenue was $5.9 million, a decrease of 28%.
- Gross margin was $2.4 million, a decrease of 36%.
- Adjusted EBTIDA was $1.1 million, a decrease of 22%.
Financial Summary
Three months
ended($000’s) |
June 30, 2020 |
June 30, 2019 |
SaaS revenue |
$ |
4,262 |
|
$ |
5,540 |
|
BDC revenue |
|
1,541 |
|
|
1,882 |
|
Services and one-time revenue |
|
136 |
|
|
794 |
|
Total revenue |
|
5,939 |
|
|
8,216 |
|
|
|
|
Cost of revenue |
|
3,493 |
|
|
4,385 |
|
|
|
|
Gross margin |
|
2,446 |
|
|
3,831 |
|
Gross margin percentage |
|
41 |
% |
|
47 |
% |
|
|
|
Adjusted EBITDA |
|
1,063 |
|
|
1,353 |
|
|
|
|
Adjusted cash income |
|
645 |
|
|
768 |
|
|
|
|
Net loss |
$ |
(65 |
) |
$ |
(960 |
) |
Recent Business Highlights
- In April 2020, Autovance announced its MyDeal Digital Retailing
System to allow dealers and customers to interact online for
vehicle sales.
- In May 2020, XSellerator launched its DMS Service Performance
Pack, a set of integrated tools designed to help dealerships
provide a more touchless service experience and to help maximize
the performance of their service departments.
- In June 2020, Mr. William Nurthen was appointed to Quorum’s
Board of Directors and Mr. Craig Nieboer retired from the Board of
Directors.
Novel Coronavirus
(“COVID-19”)
Due to the concerns over the COVID-19 pandemic,
the Corporation transitioned all staff to work from home and all
onsite training and installation activities were put on hold by
March 20, 2020.
In April 2020, dealerships’ sales departments
were shut down or operating on minimal staff, while service and
parts departments operations slowed down considerably. With its
dealership customers facing an extremely difficult business
environment, the Corporation proactively addressed these concerns
by providing a monthly support discount for April and May in order
to protect long-term SaaS revenue. During the pandemic, Quorum also
worked with both the US and the Canadian governments and was
successful in its applications for the Canadian Emergency Wage
Subsidy (“CEWS”) program and the US Paycheck Protection Program
(“PPP”).
Desrosiers Automotive consultants has reported
that Canadian monthly light vehicle year-over-year sales declined
by 47% in March, 75% in April, 44% in May and rebounded to only a
15% decline in June 2020. While there are indications that
dealership’s business is returning in Canada, there remains some
uncertainty regarding the duration and depth of the disruption to
dealerships’ businesses from COVID-19. Despite this uncertainty,
the Corporation is confident that the combination of the actions
taken to stem cash outflow, the proceeds raised from the November
2019 financing and government financial support provides the
Corporation with sufficient resources to regain growth momentum
through the recovery. Quorum’s solutions are critical to dealership
operations and should be highly valued in helping dealers recover
from the COVID-19 shutdown. Furthermore, the management team guided
Quorum through similar challenges in 2008-09 where the Corporation
emerged from the global financial crisis stronger than it
entered.
Quorum Q2 2020 Results Conference Call
Details and Investor Presentation
A conference call has been scheduled for
Thursday, August 20 beginning at 11:00 MT (13:00 ET), at which time
Maury Marks, President and Chief Executive Officer and Marilyn
Bown, Chief Financial Officer will provide a presentation of the
results followed by a question and answer period.
Anyone wishing to participate in the call is
asked to dial-in using the following numbers and ask for the Quorum
Information Technologies Inc. Q2 2020 Quarterly Results Conference
Call. Callers are asked to dial-in 5 minutes before the scheduled
start time.
Details for anyone wishing to participate in the
conference call are:
|
Local: |
1 (403)
451-9838 |
|
|
|
|
Toll-Free North America: |
1 (888) 231-8191 |
A replay of the conference call will be
available beginning at approximately 14:00 MT on Thursday August
20, 2020 until 21:59 MT on September 3, 2020, and can be accessed
by dialing:
|
Local: |
1 (403)
451-9481 |
|
|
|
|
Toll-Free North America: |
1 (855) 859-2056 |
|
|
|
|
Password#: |
2381554 |
A replay of the conference call will also be
available for at least 30 days following the call on Quorum’s
website, under the Investors section, at www.quorumdms.com.
Quorum’s Q2 2020 Quarterly Results investor
presentation will also available for download after the press
release has been issued under the Investors section on the
Company’s website at www.quorumdms.com.
Forward Looking Information
This report contains certain forward-looking
information and statements within the meaning of applicable
securities laws. All statements in this report, other than
statements of historical fact, which address events or developments
concerning Quorum Information Technologies Inc. ("Quorum" or the
“Corporation”) that Quorum expects to occur are "forward-looking
information and statements". The use of any of the words "expect",
"anticipate", "continue", "estimate", "objective", "ongoing",
"may", "will", "project", "should", "potential", "could",
"scheduled", "believe", "plans", "intends", "might" and similar
expressions are intended to identify forward-looking information or
statements.
In particular, but without limiting the
foregoing, this document may contain forward-looking information
and statements pertaining to the following: business plan of Quorum
including its plans for targeting new Original Equipment
Manufacturer (“OEM”) Integration, new dealership rooftop sales, and
increasing Automotive Group Partnerships; the timing for completion
and cost of OEM Integration; estimates of return on assets and
EBITDA; potential merger and acquisition (“M&A”) opportunities;
the timing of adoption of new accounting standards and the
potential impact of new accounting standards on the Corporation’s
financial statement; the effect of acquisitions on the Corporation
including the effect of the Autovance, DealerMine and Oasis
acquisitions; the effect of the BDC Capital facility; the effect
Corporation’s private placement financing; the effect of the
COVID-19 pandemic on industry activity and economic activity in
North America as a whole; various industry activity forecasts;
growth opportunities including those in the United States;
anticipated requirements by OEM manufacturers relating to
integrations and certifications; and other expectations, beliefs,
plans, goals, objectives, assumptions, information and statements
about possible future events, conditions, results of operations or
performance. Various assumptions were used in drawing the
conclusions or making the forecasts and projections contained in
the forward-looking statements throughout this report. The
forward-looking information and statements contained in this report
reflect several material factors, expectations and assumptions
including, without limitation: (i) capital expenditures by dealers;
(ii) market availability of current and future dealership rooftops;
(iii) schedules and timing of certain projects and Quorum's
strategy for growth; (iv) Quorum's future operating and financial
results; and (v) treatment under governmental regulatory regimes
and tax and other laws. The forward-looking information and
statements included in this report are not guarantees of future
performance and should not be unduly relied upon.
Forward-looking statements are based on current
expectations, estimates and projections that involve a number of
risks and uncertainties, which could cause actual results to differ
materially from those anticipated and described in the
forward-looking information and statements. Such information and
statements involve known and unknown risks, uncertainties and other
factors that may cause actual results or events to differ
materially from those anticipated in such forward-looking
information or statements including, without limitation: (i)
volatility in exchange rates for the Canadian dollar relative to
the US dollar; (ii) liabilities and risks inherent in the software
services industry; (iii) competition for, among other things,
capital and skilled personnel; (iv) changes in general economic,
market and business conditions in Canada and the United States; and
(v) actions by governmental or regulatory authorities including
changes in income tax laws or changes in tax laws. Quorum cautions
that the foregoing list of assumptions, risks and uncertainties is
not exhaustive. The forward-looking information and statements
contained in this document speak only as of the date of this
document, and Quorum assumes no obligation to update or revise them
to reflect news events or circumstances, except as may be required
pursuant to applicable laws. Any financial outlook or future
oriented financial information in this document, as defined by
applicable securities legislation, has been approved by management
of Quorum. Such financial outlook or future oriented financial
information is provided for the purpose of providing information
about management's current expectations and plans relating to the
future. Readers are cautioned that reliance on such information may
not be appropriate for other purposes.
About Quorum Information Technologies
Inc.
Quorum is a North American company focused on
developing, marketing, implementing and supporting its portfolio of
software and services for automotive dealerships that includes:
- XSelleratorTM, a Dealership Management System (DMS) that
automates, integrates and streamlines key processes across
departments in a dealership, and emphasizes revenue generation and
customer satisfaction.
- DealerMine CRM, a sales and service Customer Relationship
Management system and set of Business Development Center services
that drives revenue into the critical sales and service departments
in a dealership.
- Autovance, a sales desking and menuing system that increases
sales department gross margins and improves customer satisfaction
for dealerships.
- Advantage, a full showroom system for both franchised and
independent dealerships and a comprehensive operating system that
includes accounting for the independent market.
Quorum has filed its Q2 2020 unaudited condensed
consolidated financial statements and notes thereto as at and
period ended June 30, 2020, and accompanying management and
discussion and analysis in accordance with National Instrument
51-102 - Continuous Disclosure Obligations adopted by the Canadian
securities regulatory authorities. Quorum Information Technologies
Inc. is traded on the Toronto Venture Exchange (TSX-V) under the
symbol QIS. For additional information please go to
www.QuorumDMS.com.
Neither the TSX Venture Exchange nor its
regulation services provider (as that term is defined in the
policies of the TSX Venture Exchange) has reviewed this release and
neither accepts responsibility for the adequacy or accuracy of this
release.
Quorum Contact: Maury Marks
403-777-0036MarksM@QuorumDMS.com
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